Bank of Canada Holds Off on Immediate QE Measures (Midday Snapshot)

By IBT Staff Reporter On 04/23/09 AT 10:47 AM

This is article is released weekdays under the heading Daily Fundamentals at 5pm EST on www.dailyfx.com

Price action in the US morning has been relatively quiet with the market content on some consolidation ahead of the next moves. The big news has come out of Canada where the Bank of Canada announced in its monetary policy report that it would hold off on the immediate implementation of formal QE measures.

MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES

Price action in the US morning has been relatively quiet with the market content on some consolidation ahead of the next moves. We have however been hearing of good London fix related demand for Euro and Cable. US equities have been trading marginally lower while on the commodity front, both gold and oil trade higher, up 1.90% and 0.80% respectively. The as expected initial jobless claims data has taken a backseat to the weaker existing home sales and a Fitch report which forecasts an additional weakness in US house prices. Fitch also expects housing declines into late 2010. In Canada, retail salesmanaged to come in better than expected but the big news was the Bank of Canada announcement in its monetary policy report that it would hold off on the immediate implementation of formal QE measures. Usd/Cad has been sold off heavily on the news with the Loonie jumping up to the second best performer on the day. Elsewhere, the expansion of the Fed TALF is now being questioned on lack of progress to purchase CMBS. This has shaken some investor confidence on Thursday. The Norwegian krone is the strongest currency on the day, while the South African rand underperforms. Looking ahead, Fed Stern is slated to speak at 15:45GMT on new policies for financial stability.

ANALYSIS OF SELECTED RATES

Aud/Nzd: Price action on the cross has been quite constructive of late with the market now in the process of consolidating ahead of the next push higher through 1.2770 (20Apr high) and back towards the yearly highs at 1.2935 from early March. However moves towards the 1.3000 area have been met with solid resistance and any rallies over the coming days towards the psychological barrier should be used as a formidable sell opportunity. Daily studies are approaching overbought levels and a push towards 1.3000 over the near-term will officially put the RSI above the critical 70 level to reaffirm bearish outlook by 1.3000.